updated 07:46 pm EDT, Thu November 1, 2012
Search engine giant accused of antitrust violations with FRAND patents
A staff report from the Federal Trade Commission has reportedly recommended that the US government pursue legal remedies against Google for violating antitrust laws. The review sprung from fears that Google is demanding sales embargoes against products that use patents required to be licensed under fair, reasonable, and nondiscriminatory terms (FRAND) terms rather than engage in the required good-faith negotiations legally required by owners holding standards-essential patents.
Google and fully-owned subsidiary Motorola Mobile are embroiled in many suits with Apple and Microsoft among others, each alleging that their patents are being infringed by other companies, generally involving smartphone and tablet technology. In most cases, the suits request that infringing products be prevented from sale in or import to the US. FTC Chariman Jon Leibowitz said in the middle of September that he expected a decision in the investigation to be reached by the end of 2012. Google declined to discuss the report, claiming that "we take our commitments to license on fair, reasonable, and non-discriminatory terms very seriously."
When the Justice Department approved the Google acquisition of Motorola Mobility, and the Nortel Network patents by a group spearheaded by Apple and Microsoft, it said it would monitor for patent misuse by any of the companies. Apple and Microsoft pledged that they wouldn't prevent any FRAND licensing of standards-essential patents. Google promised the same, as long as good-faith negotiations for the patents were underway, but maintained the right to seek court relief if no agreement could be reached on licensing.
Critics argue that this exception has allowed Motorola (and by extension Google) to avoid negotiating in good faith and demand unreasonable terms. When negotiations fail, the company files suit and claims that potential licensees refuse reasonable terms.
Motorola has historically asked for 2.25 percent of the cost of an entire device that uses even one of its patents, and rather than a rate based on just the value of the patent. For example, the current requested rate for Microsoft's Xbox 360 is $4.50 of the $200 retail price per unit sold.
Previous demands for Windows' use of the H.264 patent asked for 2.25 percent of each PC sold, and not just the retail value of Windows. Conservative estimates by Microsoft have placed the amount they would owe for the video playback patent alone in the billions of dollars, assuming the average PC was conservatively worth $500. The rate Motorola demands is several orders of magnitude larger than the capped license fee maximum of $6.5 million per year demanded for the patent by the MPEG LA group.